MediSave TM : New Software to Calculate the Return on Investment of Tobacco Control Programs

1. MediSaveTM: New Software toCalculate the Return on Investment ofTobacco Control Programs Steven S. Foldes, Ph.D. and Anju Joglekar, Ph.D. Blue Cross and Blue Shield of Minnesota and Medical Scientists, Inc. November 19, 2002

2. Making the Business Case • Why calculate ROI? • Tobacco is the leading preventable cause of death and disease, and that tobacco costs the nation $50 billion in direct medical costs annually. • Regrettably, this is not always sufficiently persuasive. • Need is to demonstrate ROI for the interventions you plan to field in your specific population. • “The single most important piece of information that employers want to see about tobacco control is the return on investment.” • Christopher Queram, CEO of Employer Health Care Alliance Cooperative of Wisconsin, at the Addressing Tobacco in Managed Care Conference, April 10, 2002 Center for Tobacco Reduction & Health Improvement

3. Making the Business Case • Value of modeling smoking interventions • Retrospectively answer evaluation questions • Prospectively examine multiple scenarios • Important with prevention efforts that have desired outcomes mostly in the future but immediate costs • Helps reinforce importance of interventions and persuade others to adopt them Center for Tobacco Reduction & Health Improvement

4. Other Tools • SAMMEC • Models smoking-attributable mortality • Strong scientific base • Credibility of the CDC • Does not model future events or costs • Not designed to calculate ROI due to interventions • SimSmoke • Models future impact of multiple interventions, including policy-related interventions • Strong scientific base • Focus is on smoking rates and smoking-attributable mortality, not on costs Center for Tobacco Reduction & Health Improvement

5. Why MediSaveTM? • MediSaveTM: premier ROI calculation software for disease management programs • Medical Scientists, Inc. has demonstrated ability to create effective, user-friendly software • $1 million platform • Strong scientific base • Useful in a health plan context • Highly flexible • Redesigned for tobacco • Single disease v. root cause for multiple diseases • Specific interventions • Incorporates SimSmoke outputs for policy-related interventions Center for Tobacco Reduction & Health Improvement

6. What is MediSave™? MediSaveTM is a predictive modeling software suite that forecasts the clinical and financial impact of a pharmaceutical or medical technology. Center for Tobacco Reduction & Health Improvement

7. User Defined Center for Tobacco Reduction & Health Improvement

8. Joint Project Team • Medical Scientists, Inc. • Anju Joglekar, Ph.D. • Paula Kadison, M.D. • Rebecca Chao, M.P.H. • Blue Cross and Blue Shield of Minnesota • Steven S. Foldes, Ph.D. • Marc Manley, M.D., M.P.H. • Nina Alesci, M.P.H. • Xiaohong Chen, M.S. • Monica Schultz, M.S. Center for Tobacco Reduction & Health Improvement

9. MediSaveTM Model • The model estimates all DIRECT health care outcomes and costs for a given population by condition and smoking status. • Based on: • Relative risks from epidemiological literature • Administrative claims data • 20 year projected incidence of 39 conditions: • 17 smoking related • 22 unrelated to smoking • Estimated costs: • Professional, facility, lab/radiology/pathology, pharmacy Center for Tobacco Reduction & Health Improvement

10. MediSaveTM Model Center for Tobacco Reduction & Health Improvement

11. MediSaveTM Model • Model also estimates INDIRECT morbidity and mortality costs by smoking status. • Based on: • Worksite studies • Government sources, e.g. NHIS • Outcomes and costs of interest: • Lost work days due to illness (by smoking status) • Lost work time due to smoking breaks • Years of potential life lost (YPLL) • Employee replacement costs due to smoking attributable deaths Center for Tobacco Reduction & Health Improvement

12. MediSaveTM Model Center for Tobacco Reduction & Health Improvement

13. Intervention Programs Center for Tobacco Reduction & Health Improvement

14. Perspective • MediSave models morbidity and mortality costs from several perspectives: • Societal • Employer • Health plan • Generates projections for both medical and non-medical costs using each perspective. Center for Tobacco Reduction & Health Improvement

15. The Business Case:Baseline Projections • The user can answer questions about the “status quo,” such as: • What is the expected number of cases by condition and smoking status over the next twenty years? • What are the smoking attributable medical costs by condition and smoking status? • What are the all medical costs by smoking status? • What are lost work days by smoking status? • What are non-medical costs by smoking status? Center for Tobacco Reduction & Health Improvement

16. The Business Case:Baseline Projections *This projection is not based on real data. Center for Tobacco Reduction & Health Improvement

17. The Business Case:Baseline Projections *This projection is not based on real data. Center for Tobacco Reduction & Health Improvement

18. The Business Case:Effect of Interventions • What is the expected ROI associated with a cessation program? • How far into the future is the program break-even point? • How many smokers quit due to the implementation of the program? • How many new cases were averted by condition? • How many hospitalizations were saved? • How many work days were saved? • How many lives were saved? Years of potential life saved? Center for Tobacco Reduction & Health Improvement

19. The Business Case:Effect of Interventions *This projection is not based on real data. Center for Tobacco Reduction & Health Improvement

20. The Business Case:Effect of Interventions *This projection is not based on real data. Center for Tobacco Reduction & Health Improvement

21. The Business Case:Effect of Interventions *This projection is not based on real data. Center for Tobacco Reduction & Health Improvement

22. The Business Case:“What if” Scenarios • How will the ROI be affected if the: • Participation in the program increases by 10%? • Quit rate turns out to be 5% lower? • Relapse rates are higher than the assumed rates? • Program costs end up being 20% higher? • Inflationary trends double? Center for Tobacco Reduction & Health Improvement

23. Major Inputs:Smoking Patterns • Prevalence of smokers, former smokers and never smokers • Smoking Rates • Background quit rates • Background initiation rates • Relapse rate by quit duration Center for Tobacco Reduction & Health Improvement

24. Major Inputs:Smoking Patterns Center for Tobacco Reduction & Health Improvement

25. Prevalence andCosts of Conditions • Prevalence by condition • Smoking related conditions • Conditions unrelated to smoking • Prevalence of co-morbid conditions • Medical costs by condition • Claims distribution table for each condition • Costs for co-morbid conditions Center for Tobacco Reduction & Health Improvement

26. Prevalence of Conditions Center for Tobacco Reduction & Health Improvement

27. Non-Medical Factors • Workdays lost due to illness • Average length of smoking breaks • Percent employed • Percent by job category • Salaries by job category Center for Tobacco Reduction & Health Improvement

28. Health Plan Benefits • Plan type • Gatekeeper/Open Access • In network benefits • Deductible • Coinsurance % • Coinsurance limit • Pharmacy benefit • Drug card co-pay • Plan maximum, stop-loss limit, transplant limit Center for Tobacco Reduction & Health Improvement

29. Health Plan Benefits Center for Tobacco Reduction & Health Improvement

30. Intervention Parameters • Intervention Characteristics • Baseline % managed • Participation rate • Program costs • Prevention and Cessation Benefit • Intervention quit rate • Reduction in initiation rate Center for Tobacco Reduction & Health Improvement

31. Packaging of Interventions • MediSave provides the flexibility to the user to examine the impact of interventions in two ways: • One intervention at a time • Multiple interventions packaged together in a program Center for Tobacco Reduction & Health Improvement

32. Data Sources • Epidemiologic data • Administrative claims data • Survey data • Expert opinion Center for Tobacco Reduction & Health Improvement

33. Model Limitations • Model requires many assumptions, which are only as strong as the current research base allows. • Accuracy of relative risks • Particularly, decline over time for former smokers for specific conditions • Relapse rate assumptions • One relapse rate regardless of prior attempts or nature of intervention • Comprehensiveness of non-medical costs • e.g. Exclusion of worker’s compensation • Data limitations • Not fully representative, e.g. excludes uninsured; • Size of data set in relation to number of cells leaves some cells empty or small Center for Tobacco Reduction & Health Improvement

34. Model Strengths • Builds on but goes beyond SAMMEC and SimSmoke • All medical costs plus non-medical costs (societal and employer perspectives) • Strong evidence base • Useful in health plan populations • Accounts for various benefit sets • Examines secondary and primary interventions (with input from SimSmoke) both individually and in combination Center for Tobacco Reduction & Health Improvement

35. Model Strengths • Highly flexible • Allows detailed tailoring where data are available • Uses best estimate “plug” numbers when specific data are not available • Ability to use prospectively to model “what if” scenarios • Ability to use retrospectively as part of an evaluation of implemented programs Center for Tobacco Reduction & Health Improvement

36. Conclusion • Makes the business case for smoking reduction programs to • health plans • employers • policy makers • By calculating ROI for • specific interventions • in a specific population Center for Tobacco Reduction & Health Improvement